A person to person car loan is a loan taken out when someone buys a car owned by another individual and not a dealership. This is another financing service offered by lenders to customers who wish to purchase second hand cars from friends or family. In most cases, their customers are purchasing from strangers who posted an ads.  The lenders only check the person who is applying for the loan and not the party who is selling the car. Currently, this type of car loan is not offered by many lenders online.

The loan application is somewhat similar to car loans when buying a brand new car. The lender will generally require you to provide information on your monthly gross income and sources of income, reference to your employer and previous employer if you have been working in your current company for less than 3 years, your residence status and your monthly mortgage or rent payment if it applies.  You don’t have to disclose child support, alimony and other income separate from your main source of income.

The car you wish to purchase has to meet certain requirements too. Generally, you cannot secure a loan on used cars that are more than 7 years old unless they are luxury vehicles or classified as collectible classics. If your credit score is not too good, you may have to find a guarantor or co-signor with good credit history to co-sign the loan with you. They will ask your guarantor the same questions you were asked. Generally, all the information they gather from you are to help them assess your ability to pay off a loan. The same goes for your guarantor.

The rates for a car loan from person to person are pretty much the same as in other used car loans. The rates are one to two percent higher if you were to buy a brand new car instead. Not all sellers require you to make a down payment however it is advisable to put in 20-25% at least so you won’t have to pay for more than what the used car is worth. You have to consider that in the duration of paying off your loan, the car might unexpectedly need some repairs. You also have to prepare some amount for registering the car as this is not usually paid for by the seller. Make sure you have all the expenses considered before you take out a loan as you may want to include these amounts on your application.

After you have secured the loan, it will take about two weeks to have the registration of the car changed to your name. The documentation procedures take a bit longer in these kinds of transactions. If you are looking for a person to person car loan online, try big lending companies who can still offer the service to you online and get your application processed right away.